— June 25, 2021

Jeff Myers, Catalyst’s Senior Vice President, Market Access & Reimbursement Strategies, discusses the legal technicalities which tripped up Oklahoma as the health providers win their lawsuit against Republican Gov. Kevin Stitt’s MCO proposal.

By Peter Johnson

In Oklahoma, the most recent state to implement a Medicaid expansion under the Affordable Care Act, the state Supreme Court recently struck down a plan pushed by Republican Gov. Kevin Stitt to implement a managed care organization (MCO) model for the expanded program. Experts say that the decision, which is the result of a suit brought by health care providers, is likely to increase cost in the program and is reminiscent of a similar provider-driven effort to undermine an MCO program in North Carolina.

The Oklahoma Supreme Court’s ruling holds that Stitt was acting outside his authority in soliciting bids for MCO contracts, which were awarded to four insurers — Blue Cross and Blue Shield of Oklahoma, Humana Inc.’s Healthy Horizons, Centene Corp.’s Oklahoma Complete Health, and UnitedHealthcare — and set to start enrolling members on Oct. 1. The court found that the voter-approved initiative expanding Medicaid did not explicitly authorize a managed care system, and said that for such a system to be implemented, the state legislature would have to pass a bill creating a managed care program.

“We find no express grant of legislative authority to create the SoonerSelect program nor do we find the extant statutes implicitly authorize its creation,” Justice Douglas Combs wrote in the opinion. “The purchase of Medicaid benefits would still need to be specifically authorized by law. Once the purchase of health care benefits for Medicaid recipients is specifically authorized by law, then the OHCA [Oklahoma Health Care Authority] has the power and duty to enter into contracts for the delivery of that state purchased health care.”

In his opinion, Combs detailed the long history of managed care in the state. In the mid-1990s, the state applied for an 1115 waiver with CMS authorizing a transition to a hybrid model with both contracted managed care and semi-capitated direct payment. The managed care program, SoonerCarePlus, ended in 2003, and those beneficiaries — about 189,000 people — were transferred to the capitated direct payment model, SoonerCare Choice. As Combs observed, “SoonerCare Plus was effectively terminated almost 18 years ago, and SoonerCare Choice continued thereafter.”

The plaintiffs in the lawsuit, a coalition of Oklahoma’s health care practitioner trade groups led by the Oklahoma State Medical Association, framed the issue as “privatizing Medicaid” in press reports. The stakes are high: according to the ruling, “approximately 773,000 Oklahomans, which is roughly one-fifth of the State’s population, will receive Medicaid services under the proposed SoonerSelect managed care system. The Medicaid program is a substantial part of the State’s budget; over $2.4 billion was the State’s portion of Medicaid for the 2021 budget.”

“The Supreme Court of Oklahoma said, ‘Sorry, you don’t have authority to do this. And that legislation doesn’t give you this authority,’” David Kaufman, a partner at Laurus Law Group LLC, tells AIS Health, a division of MMIT. “It is the state Supreme Court, and it’s a state constitutional issue. So there’s no further appeal to the federal courts or to the Supreme Court. This is the final word.”

“In this lawsuit, the major players were the state against the health care [provider] associations, so they must feel that it if an MCO system is established, that rates will be lower, and maybe benefits will be less. On the other hand, I would think the insurance companies that sign these contracts already with the state are probably very interested in that market, because it’s very lucrative,” Kaufman observes.

“So the next place where this goes, I suppose, is the Oklahoma legislature. And the question will be, will the legislature adopt a law? And will the governor sign a law that would allow an MCO-type program to be established? That will be an interesting lobbying battle between the medical societies, medical groups and insurance companies,” he adds.

Indeed, the argument over managed care is just starting, according to the Wagoner County American-Tribune.

Managed Care Critics Fret Over Rates

“I believe this battle is far from over,” Republican Rep. Marcus McEntire, a managed care opponent, told the newspaper on June 9. “I believe what the governor will do is probably use [Justice James] Winchester’s dissenting opinion” — which held that the governor had not stepped out of bounds in soliciting bids — “for a springboard for his next move. I think the Oklahoma Health Care Authority will most likely go back in and quickly promulgate emergency rules and try to rebid those requests for proposals.”

McEntire and other MCO opponents are concerned that providers will be paid reduced rates and that rural members won’t have access to care, according to the American-Tribune. The same article reported that Senate Appropriations Chairman Roger Thompson (R) said getting managed care passed through the legislature would be difficult.

“It seems to be a little bit more of a technical decision, for lack of a better term, than a decision on the substance of setting up such a system, which clearly is recognized by the majority of other states in this country,” Thomas Johnson, executive director of the Population Health Alliance, tells AIS Health. Johnson, an attorney, was previously president and CEO of the Medicaid Health Plans of America, a trade association representing the Medicaid managed care industry. “I would urge the legislature to take up this matter as soon as possible.”

Johnson says MCOs help improve outcomes — and generate value for the states they contract with — by reimbursing providers for care coordination and coaching.

Is It Really ‘Privatized Medicaid’?

“One thing that we do in population health, and it’s also done in Medicaid managed care, is that we’re involved with our consumers outside of the office visits that they have to their provider. We’re involved in getting all types of messages to them about the condition that they have, how to manage it, notifications about their prescriptions, setting up appointments, giving them the latest information as to how to maintain either what afflicts them or maintain a healthy lifestyle,” Johnson says. “I think in many cases, that’s what some of these [provider] groups are missing.”

He also adds that the idea of “privatized Medicaid” is misleading.

“The fact of the matter is, those providers that are accredited to be Medicaid providers — they’re private providers,” Johnson says. “So the private sector is involved in Medicaid, whether you’ve got an MCO system or not. The question is, do you want to manage and coordinate that care and see improved outcomes? Or do you want to just have providers participate in it without oversight and management?”

Jeff Myers, senior vice president of reimbursement strategy and market access at Catalyst Healthcare Consulting, Inc., tells AIS Health that Oklahoma providers’ opposition to managed care is reminiscent of a similar battle in North Carolina. There, providers sued in 2019 to block implementation of an MCO program, but implementation was cleared in February of this year following a court ruling. AmeriHealth Caritas, Blue Cross and Blue Shield of North Carolina, Centene Corp. and UnitedHealthcare are administering the program, which held a statewide enrollment period from March 15, 2021 through mid-May.

Certain Providers May See Better Pay

“From an entrenched provider’s perspective, there is always a concern that managed care is going to come in, pull off the cream, and there’s still going to be doing the same amount of service, but now for less money,” Myers says. “What I think is true in North Carolina is certainly true in other states. There are certain providers where they’re not particularly amenable to seeing either reduced payment or more risk.”

Yet Myers says that’s not actually a given, and providers who work with vulnerable populations often see better compensation with an MCO program in place.

“In the end that always turns out not to be true. Some providers will get less, because they’ve probably been overpaid. But some providers actually see an increase,” he says. “In my experience, FQHCs [Federally Qualified Health Centers] actually receive a little bit more money, because a lot of the Medicaid enrollees were going through there [already]. The plans had a real incentive to push money to the FQHC, so they could get data out of them so that the plans could meet their targets for health outcomes, which is part of the way they get paid.”

“As you move to managed care, you start controlling the cost better, because it becomes more predictable. You could forecast, to some extent, how many lives are going to be covered,” Gary Rosenfield, a senior vice president at ConsejoSano, tells AIS Health. Oklahoma’s fracas is “just another attempt by providers to really try to benefit from the fee-for-service model, so they don’t have to have accountability for added for value and quality.”

Contact Kaufman at and Myers, Johnson and Rosenfield via Joe Reblando at